How to Set Up a Living Budget

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By Sabah Karimi
eHow Contributing Writer

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Contrary to what you may be thinking, the point of a budget is not to immediately squirrel away every single penny that comes into your possession. The main point of a budget is to make sure of two things: that your basic needs are taken care of each month; and that you are completely aware of how much cash you have throughout the month. When you figure out what type of spender you are, you can create a working budget that helps you meet your financial goals.

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Instructions

Assess Your Spending Habits

First you have to figure out what kind of spender you are: you may be the frugal type or the extravagant type. Being frugal means that you bargain hunt, pass up wild spending sprees and generally keep a fairly tight rein on your cash. You need a budget just as much as an extravagant spender, because you may be skimping on the pleasures of life when you could afford to live much more pleasantly. The good news, though, is that your inherent thriftiness will probably make it easier to stick to your budget and build your savings.

The extravagant type often finds it hard to live on a budget. If you don't keep track of your expenditures and rarely look at the price of purchases, you may have extra work to do when creating a budget.

Next: Determine Your Gross Monthly Income

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dhoni said

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